NTPC reissues boiler tender; L&T may bid along with others

NTPC reissues boiler tender; L&T may bid along with others

New Delhi: State-run power utility NTPC Ltd has reissued a tender for boilers on 24 June after Larsen and Toubro Ltd (L&T) said on 17 June that it would take responsibility for the bids submitted by a joint venture it has with Japan’sMitsubishi Heavy Industries Ltd.

The tender for so-called supercritical boilers and turbines had run into controversy after NTPC disqualified bids by a venture of Larsen and Toubro Power Ltd, a unit of L&T, and Mitsubishi.

“The decision to go for re-tendering was taken at our 21 June board meeting. If the (L&T PowerMitsubishi) JV (joint venture) meets the tender conditions, they can re-bid," said an NTPC executive, who did not want to be named.

Supercritical equipment such as boilers and turbines improve the efficiency of power plants.

NTPC’s Rs40,000 crore tender invited manufacturers to supply 11 supercritical boilers and an equal number of supercritical turbines of 660MW each, to be built locally.

There were two bidders for the boiler tender—state-run Bharat Heavy Electricals Ltd (Bhel) and L&T Power-Mitsubishi.

The joint venture was also among five bidders for the supply of turbines, along with Bhel, Russia’s Power Machines, and joint ventures of Alstom SA and Bharat Forge Ltd, and Toshiba Corp. of Japan and JSW Group.

NTPC’s board disqualified L&T Power-Mitsubishi’s bid, saying L&T should have formed the venture with Mitsubishi and not its subsidiary.

To mollify the utility’s board, L&T has submitted a modified joint deed of undertaking, assuming complete responsibility for the contract.

“By submitting the modified joint deed as per the tender requirement, it made L&T liable," the NTPC executive said. “By doing so, L&T took the whole commercial and technical risk."

An L&T spokesperson declined to comment.

The bid documents were put up for sale on Monday. The last date for submission is 25 August.

“We have gone for a notice inviting tender (NIT). The NIT was issued some days back," said R.S. Sharma, chairman and managing director, NTPC.

The lowest bidder for boilers will be given an order for six units. If Bhel is not the lowest bidder, the government will award it the order for the remaining five units,provided it agrees to match the lowest bid. If it does not, the option will be given to others in the order of bid ranking.

“With the retendering for boilers, more people will bid. However, this will delay the process," said the chief executive at one of the equipment firms, who has bid for the equipment contract but who did not wish to be identified due to commercial considerations.

The tender said the winner would have to set up factories in India to develop the local power generation equipment manufacturing industry. Such projects tend to be capital intensive, with investment running into several thousand crores of rupees.

India expects to add 62,000MW to its current power generation capacity of 153,000MW by 2012. Orders for 42,431.58MW have been placed with Bhel, the country’s largest power equipment maker, which has an annual capacity of 10,000MW.